State Agencies' Imports Hit Record Sh89 Billion
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- 13 Nov 2024
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The value of import orders by Kenyan government agencies has surged dramatically, reaching a record Sh89.04 billion in the 12 months ending June 2024. This represents a 48.4% increase compared to the previous year, marking the fastest growth in at least eight years and coinciding with the first full year of the current administration.
According to data from the Central Bank of Kenya (CBK), this surge is the highest recorded since June 2017, when the CBK began fully disclosing import figures. The current record reverses the trend from the previous year, where state imports had dropped by 34.1% to Sh60.02 billion in June 2023, down from an all-time high of Sh91.01 billion in June 2022.
The data indicates that while the government's import bill had been steadily rising since July 2019, it experienced a notable decline immediately following the 2022 General Election.
Commonly Procured Goods
Although the CBK does not specify the exact items imported, commonly procured goods by government agencies include:
- Furniture
- Stationery
- Machinery
- Motor vehicles
- Textiles
- Arms
Despite ongoing policies aimed at reducing import dependency, local suppliers have struggled to meet the government’s demand for domestically manufactured products.
In February, the Treasury acknowledged the challenges faced by the "Buy Kenya, Build Kenya" initiative, a policy introduced nearly a decade ago to encourage government agencies to source at least 40% of their consumable products locally. However, this policy has yet to achieve the targeted procurement levels.
The Treasury noted in its 2024 Budget Policy Statement that, “The challenge [to achieving the 40% local content quota in government procurement] is local merchants are providing imported products once given contracts to procure for the government.”
To address this issue, the State Department for MSME (Micro, Small, and Medium Enterprises) Development has been tasked with enforcing the preferential treatment policy under "Buy Kenya, Build Kenya," ensuring that 40% of government procurement is reserved for locally manufactured goods.
Kenya's manufacturers have raised concerns about domestic suppliers who allegedly present samples of local products during tendering processes, only to source the items from abroad—particularly from countries like India or China—once awarded the contracts.
Despite these efforts, Kenya continues to be a net importer, with the country's merchandise trade deficit reaching $9.85 billion (Sh1.3 trillion) in 2023. This figure represents a slight improvement from the previous year, when the trade deficit stood at $11.72 billion (Sh1.5 trillion).
The record increase in imports by Kenyan government agencies highlights the ongoing challenges in balancing local procurement initiatives with the realities of supply and demand. As the government seeks to promote local manufacturing and reduce dependency on imports, addressing the issues faced by local suppliers and ensuring compliance with procurement policies will be crucial for achieving sustainable economic growth.
